The coronavirus will continue to be felt throughout the week in company earings updates and economic data.
China’s central bank is expected to cut rates, and China sales will feature in Walmart’s results. Berkshire Hathaway also reports this coming weekend.
The spread of the virus will factor when HSBC, which has a heavy presence in Asia, reports. Another of the big UK lenders, Lloyds, also has results out.
China is the world’s largest buyer of commodities, meaning the coronavirus is sure to feature when miners BHP Billiton, Glencore and Anglo American report.
The outbreak is also likely to hit Germany’s Zew expectations on Tuesday.
The UK has some key data points too, including inflation and retail, while public finance numbers will feed into the country’s Budget next month, if it goes ahead. IHS markets also releases manufacturing and services purchasing managers’ indices for the UK, eurozone, France, Germany and the US on Friday.
Facebook’s Mark Zuckerberg, fresh from the Munich Security Conference, will meet EU commissioners on Monday to discuss regulation.
The EU budget battle continues on Thursday and we have the official accounts of the last policy setting meetings at the Federal Reserve and the European Central Bank.
The coming weekend is also set to be busy, with Iran holding parliamentary elections on Friday while Saudi Arabia hosts a G20 summit.
Iran elections
Iranians head to the polls on Friday for parliamentary elections, with hardliners seeing the vote as a chance to forge a radical new parliament.
More than 90 sitting MPs, including conservatives and hundreds of reformist candidates, have been told they cannot contest the polls.
Iran’s parliament may have lost its influence somewhat to other state bodies and power centres such as the Islamic Revolutionary Guard Corps over the years, but the parliamentary election remains important as it shows the direction of Iran’s political developments and which group is gaining the upper hand.
EU budget
European Council president Charles Michel convenes a high-stakes EU leaders summit on Thursday, with the goal of hammering out an agreement on the seven-year budget that must be settled before the end of the year.
EU countries are split about it because of Britain’s withdrawal from the bloc and also due to different priorities such as tackling climate change and migration on top of traditional heavy spending areas such as agriculture and regional development.
Some diplomats warn that a stalemate at the summit, which could last up to four days, would all but ensure that no deal is reached until much later this year. Others think the February meeting will be the traditional “summit that fails” — mirroring budget negotiations of years gone by.
G20 summit
Global leaders and central bank chiefs gather in Saudi Arabia over the coming weekend.
The 15th meeting of the group, which is formed of 19 countries plus the EU, is being hosted in Riyadh. Saudi Crown Prince Mohammed bin Salman hopes to take advantage of what he’s calling a unique opportunity to shape international consensus.
However, three human rights groups said they would boycott Civil 20 meetings leading up to this weekend’s summit because they gave legitimacy to a government that had no space for civil society.
Zuckerberg-EU meeting
Facebook chief executive and founder Mark Zuckerberg will on Monday meet Margrethe Vestager, EU antitrust and digital commissioner, and Thierry Breton, the European commissioner charged with overseeing the digital economy.
The meeting comes before Ms Vestager and Mr Breton are set to announce proposals on Wednesday to create a single European data market aimed at challenging the dominance of US tech giants such as Facebook, Google and Amazon.
They will also propose rules to govern the use of artificial intelligence. The commission is expected to seek feedback before finalising the rules.
● Mark Zuckerberg admits Facebook was slow on Russian disinformation
US Democratic debate
A Democratic primary TV debate is scheduled to take place in Las Vegas on Wednesday.
The Democratic National Committee has changed the requirements to participate in the debate and candidates can now qualify by either meeting a delegate or polling threshold.
A fundraising requirement has also been taken out, meaning Michael Bloomberg could take the stage for the first time this campaign season. The debate comes ahead of the Nevada caucuses scheduled to take place on Saturday.
Earnings
Coronavirus will feature when Asia-focused lender HSBC reports full-year results on Tuesday, but investors will also eagerly await news of interim chief executive Noel Quinn’s plans for restructuring.
Mr Quinn announced his plans after HSBC’s third-quarter net profit fell 24 per cent to $2.97bn, about 14 per cent below analysts’ forecasts.
However, according to Credit Suisse analysis, the bank is now at a “pivotal stage, with all the pieces in place to make Strategy 2020 a success”.
Lloyds, which reports on Thursday, also had a bad third quarter. A £1.8bn charge for the payment protection insurance scandal and a sharp rise in provisions for bad loans wiped out almost all profits.
This has left the lender looking to cut costs, and António Horta-Osório, Lloyds’ chief executive, Britain’s best-paid banker, faces a sharp pay cut under a proposed bonus shake-up
Glencore’s thermal coal business will be in the spotlight on Tuesday, when the miner and commodity trader announces its annual results.
BHP Billiton reports on Wednesday. Concerns about the US-China trade relationship have weighed on BHP’s share price since last summer, with the recent coronavirus crisis also likely to take its toll.
Investors will be also looking for Anglo American’s take on coronavirus when it reports full-year results on Thursday. Back in July, Anglo reported its best half-year results since 2011 on the back of surging iron ore prices, followed by plans for a $1bn share buyback.
Intu reports on Wednesday after suffering a plunge in its share price. An emergency fundraising also looms. Despite this, the UK shopping centre landlord is looking to increase potential payouts for top executives.
Walmart reports on Tuesday. Unlike many other US retailers, Walmart has not yet disclosed its performance for the holiday season.
It is expected to post another quarter of same-store sales gain, boosted by strength in its ecommerce and grocery business, even as it faces tough competition from Amazon.
Berkshire Hathaway reports fourth-quarter results this coming Saturday. Berkshire increased its cash pile to a record $128bn in the third quarter, as Warren Buffett struggled to find large acquisitions to boost Berkshire’s returns.
The Top Line
● Warren Buffett’s lesson for companies: keep candid
US tractor maker Deere & Co will release first-quarter earnings on Friday. The company is expected to report lower profit and sales, hurt by a slowdown in demand for farm and construction equipment.
InterContinental Hotels Group, Pearson, Axa, Telefónica and BAE Systems also report this week.
Central banks
China
The People’s Bank of China is forecast to cut loan prime rates on Thursday as Beijing acts to offset the significant economic blow expected from the coronavirus during the first half of the year.
The outbreak, which forced new year holidays to be expanded and brought city lockdowns and quarantine, has already hit consumption and industrial activity and led to downgrades for first-quarter growth forecasts.
Background reading
● How China is shaking up its interest-rate regime
Federal Reserve
The minutes of the Fed’s January meeting, when rates were unanimously kept on hold, are released on Wednesday.
Chairman Jay Powell warned on the coronavirus after the meeting and updated Congress last week on the threat to the US economy, saying the central bank would be “closely monitoring” the situation to see if it “could lead to a material reassessment of the outlook”.
This later update means the minutes are likely to be largely of interest for the latest views on a variety of technical issues related to the implementation of monetary policy.
ECB
The accounts of the central bank’s January meeting, when it also left all aspects of monetary policy unchanged, are released on Thursday.
The ECB’s strategic review was formally announced at the meeting and this account could offer further insight into the review’s content.
Turkey
The central bank cut its benchmark interest rate for the fifth consecutive time last month in an effort to encourage more lending and boost economic growth, despite a recent acceleration in inflation.
A further cut is expected on Wednesday, moving closer to president Recep Tayyip Erdogan’s pledge to bring the benchmark rate to single digits this year. He believes lower interest rates will rein in inflation, contrary to conventional economic theory.
Turkey delivers fifth rate cut in a row in effort to boost growth
Economic data
UK
Some key data points for the UK this week. First, labour market numbers for the last quarter of 2019 are out on Tuesday. The last release for the three months to the end of November showed the number of people in work beat expectations while wage growth did not fall as badly as forecast.
Wage growth is set to continue to fall in this release, with unemployment likely to remain unchanged at 3.8 per cent.
Inflation fell to its lowest level in more than three years in December, when year-on-year consumer prices dropped to 1.3 per cent from 1.5 per cent. It is expected to pick up for this release, with the consensus pointing to 1.4 per cent.
Retail sales defied expectations and continued to contract in December. The volume of retail sales, measured by value adjusted for inflation, dropped 0.6 per cent in December compared with the previous month. January’s figures this Thursday are forecast to claw back a little ground.
Friday brings public finances data, which will guide the Office for Budget Responsibility and the Treasury on how much room there is for additional borrowing ahead of the Budget, scheduled for next month though it may be delayed.
PMIs
IHS Markit publishes UK flash PMI on Friday. The UK enjoyed an unexpectedly strong bounce in its PMI in January following the landslide election victory by Boris Johnson’s Conservative party. This is likely to die down somewhat with this release, especially in light of the coronavirus
PMIs for the eurozone, France and Germany the same day will provide a snapshot as to how the region’s companies are faring. Growth in much of the eurozone economy has been sluggish in recent years.
Now the export-dependent bloc has to deal with the economic fallout from coronavirus and this release could offer an early clue as to how bad it will be.
US PMIs, also Friday, are expected to read slightly higher for manufacturing with little change expected for services data.
Markets Questions
● Will European PMI data reveal coronavirus impact?
US
Other than that it’s a quiet week for the US. Markets are shut for Presidents’ Day on Monday, but the rest of the week will bring housing starts and producer prices index on Wednesday and existing home sales on Friday.
Japan
Japan starts the week with growth figures on Monday, with the economy expected to have contracted, and ends with consumer inflation numbers on Friday forecast to come in at 0.6 per cent year on year, down from 0.8 per cent last month.
